Introduction
The economy today has seen the world change from business rivalling with other business but rather the used supply chain versus another supply chain. Persons and firms must learn to progressively grow, integrate, and develop functions of a business in order to compete. The traditional practices of quality management have and will remain to be used in the plight to address the various issues that apply in the integration matters of a supply chain (Önkal, 2011). Therefore, managers must ensure they always update their information in relation to the dynamics of supply chain to remain competitive and a market that is extremely competitive. Supply chain quality management refers to an approach towards improving performance and is based on a system that integrates partners of a supply chain and leverages all opportunities that come from the upstream and downstream linkages with the aim of achieving quality and satisfaction of final customers (Önkal, 2011). The following paper discusses supply chain quality management, leverage as a Supply Chain Management Strategy and the differences of supply chains between service and manufacturing organizations.
Theory of Supply Chain Quality Management
Many researchers agree that total quality management is vital in developing management processes and improving the effectiveness, competitiveness, as well as the flexibility of a business in its endeavour to meet customer requirements (Önkal, 2011). The idea of change remains very attractive and thus recommended to accept the principles and procedures of quality. Hence, quality management is usually associated with the model of organizational change as well as the implementation that immensely lies on the ability of the organization to adapt itself to the same principles (Fernandes, 2014). Quality management entails a number of approaches that proceed to support all business components to the quality requirements of a client or customer in a bid to increase the quality and reduce wastage.
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The interest in the area of supply chain management has increased at a gradual but consistent pace after companies evidenced the fruits of collaborative relationships within and outside their organizations. Supply Chain Management is an integrated philosophy that seeks to manage total flow from the supply of materials in the raw form to the final user. It is a process where development of products takes place and delivery of the same to customers happens. Companies can thus become more specialized with Supply Chain Management in play (Fernandes, 2014). The same companies can further search for suppliers that will offer better services at lower prices in a bid to optimize the network of supply for companies to improve on their overall performances. It has come to the attention of companies that using other companies to execute a certain phase of the supply chain benefits both of them. Supply Chain Quality Management provides a prominent vision that emphasizes on being including every person in the organization in areas to do with products, product as well as quality improvements that drive both customer satisfaction and company survival (Fernandes, 2014).
The interaction of quality management and supply chain management brings forth the ideals and concept of Supply Chain Quality Management. Robinson in the year 2005, suggested that Supply Chain Quality Management is the formal and official coordination together with the integration of processes in business that involve all partner organization in the channels of supply (Fernandes, 2014). It involves measurements, analysis, and continuous improvement of commodities in a bid to create value and attain satisfaction of the final and intermediate customers in the market. Quality improvement of all the processes of supply chain enables reductions in costs, improved utilization of resources and efficiency. Studies have been conducted to show how best the supply chain management can be used to improve the performance of a whole system of supply chain management and solve problems that arise in the network (Önkal, 2011). Essential practices of quality management can be integrated into the supplier participation programs to ensure proper collaboration that would result in improved performance of the organization as well as that of the whole performance that can be optimized when an organization demands its suppliers to remain significant trading partners and members of their value chain (Fernandes, 2014).
Strategies for leveraging Supply Chain Management Leverage in supply chain management
The Good of Leverage
According to Erickesn (2016), there are two scenarios that relate well to the usage of leverage in situations involving negotiations. The first and most prominent is the case with economies of scale. The costs of a lower priced commodity stops being a zero sum when there is an increase in volume since both sides stand a chance to win or rather benefit gravely. Therefore, a client is justified to use leverage to acquire commodities if one provides a supplier an opportunity to reduce their costs by offering an additional volume but they refuse to partake the deal (Erickesn, 2016). The second scenario is when dealing with the generic commodity type products and available at all times from a number of sources. Leverage remains the standard basis for price negotiation resulting in winners and losers.
The Negatives
Customers enjoy and prefer to categorize commodities as various types of product because it serves to simplify transactions and give them leverage. Commodities refer to products in need of little support from organizations while those that are not commodities need support of the organization to ensure the piece-price-in-and-of-itself do not represent their direct contribution to the total cost (Erickesn, 2016). The cost of such organizational support is usually disguised in the overheads of customers and the main challenge of using leverage to buy a non-commodity product is that it lacks effectiveness as a strategy for recognizing and accounting the organizational overheads.
Leverage can assume another form in the overall percentage of an individual candidate representing a given customer. Many supplier firms recognize and acknowledge the intellectually good practice in a business with a single client. In short, leverage is a tool that facilitates antagonistic relationships (Erickesn, 2016). The situation may be favourable to persons that do not rely on the supplier for anything apart from the parts they purchase and have other sources that are comparable to the same. However, when the costs go past the piece-price, leverage becomes a strategy that produces no optimal result.
Difference between Supply Chains for Service Organizations and those for Manufacturing Organizations
The main objective of any given company is to have satisfied customers. The process of pinpointing, obtaining and transporting all necessary inputs to do the above is the key function of a supply chain management. The supply chain design differs in different sectors. In the manufacturing industry, the supply chain needs significant focus on the physical product and a wider base of suppliers while the service firms have little need for such physical inputs hence work with small-scaled suppliers (Taylor, 2014).
Inputs
Both the service industry and the manufacturing industry need a significant labour input to complete the processing needed to satisfy their made promises to the end customers. Companies in both industries must have inputs from the suppliers of all kinds (Taylor, 2014). Finally, both of the industries need capital investment in form of equipment that allows their employees to carry out their work. The key difference is that a large part of the cost of manufacturing labour is incurred during procurement, transportation, and manipulation of the needed physical material while all the labour in the service industry is experienced during information manipulation and development of pertinent relationships. Therefore, the capital investments in the equipment and machinery are usually higher in the manufacturing industry.
Logistics
The previous ways of manufacturing supply chain management is fixated on logistics that involves movement of physical material from a location to another. The size and weight of material being shipped as well as the distance between the supplier and manufacturing facility plays a major role in the cost of products. Such factors are irrelevant in the service organizations and particularly in the financial sectors as there are no physical products moving except from the sheets of paper (Taylor, 2014). On the other hand, the manufacturing industry negotiates better rates of shipping filling containers with products to reduce the unit costs, service upgraders and install software to speed up the flow of communication hence reducing the costs of labour needed to produce a finished commodity.
Finished goods
A finished as per the traditional concepts, is a good that has completely been transformed from its raw state to one ready for sale. It entails a physical unit that has been well assembled, tested, and packaged resting on shelves at a certain store or warehouse ready for sale (Taylor, 2014). A finished good is similar to a closed file in the service industry.
Optimization
Optimization in the manufacturing industry is improved by increasing the speed of delivery and cost reduction (Taylor, 2014). Companies work towards reducing the physical bottlenecks as well as the inventory negotiating better raw material prices.
Conclusion
Supply Chain Quality Management is key in any organization as it provides the guideline for efficient growth and a competitive edge over the rivals. It has to be properly managed and ensued to facilitate the growth of a business. The principles and concepts of the Supply Chain Quality Management differ with industries because of the key factors that come into play.
References
Erickesn, P. (2016). Leverage as a Supply Management Strategy: The Good, the Bad and the Ugly. Supply Chain Minded, 1(1).
Fernandes, A. C., Sampaio, P., & Carvalho, M. S. (2014). Quality management and supply chain management integration: a conceptual model. IEOM, 773-780.
Önkal, D., & Aktas, E. (2011). Supply chain flexibility: Managerial implications. In Supply chain management-pathways for research and practice. Intec.
Taylor, E. (2014). Differences in Supply Chain Designs for a Manufacturing Industry vs. a Service Industry. Smallbusiness.chron.com. Retrieved 3 July 2017, from http://smallbusiness.chron.com/differences-supply-chain-designs-manufacturing-industry-vs-service-industry-14610.html
